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Bitcoin and the Power Grid

BPowerGrid

“Bitcoin is evil” articles exist in profusion, and these days I pretty much ignore them. But one of the recent types – raising awareness of Bitcoin’s environmental unsustainability – has engaged me. As it turns out, I have an unusual background to bring to this topic, and I think I should contribute.

So, here we go:

Another Apocalypse?

Let’s be honest and admit that most of the “environmental movement” sells fear of an apocalypse. And as we should all realize by now, humans have an innate weakness for fear.

More or less every apocalyptic environmental prediction has failed. (I’m talking about those that could actually be measured, obviously.) That won’t stop the fear-sellers of course, and now Bitcoin has come into their sights.

The fear is that because crypto mining uses so much power, it will bring down the grid or cause various environmental disasters. The advocates of this fear throw around scary sounding numbers (measured in terawatts) and assorted scientific terminology. (“They understand it and you don’t… don’t expose yourself to ridicule.”)

But it’s mostly just fear. Sure, proof-of-work sucks up power, but that’s nothing new. How much power do you suppose all those millions of air conditioners suck up every summer? I haven’t dug up the figures, but I’m ready to take bets that it’s several times more than crypto mining. Shall we now fear the air conditioner?

Further Factors

I worked for decades in the electrical industry, and so I’d like to give you some facts from that perspective:

  • Power use has been going up since the beginning. These days most houses get 200 amperes of electrical service. But there are still thousands of houses that are wired with only 60 amperes. That was plenty 60 years ago. New loads (devices using power) come along all the time. In just my time, we’ve added air conditioning, microwaves, and lots of computers.

  • Mining is a nice, steady load. The kind power companies thrive on. What makes their lives crazy are seasonal loads like air conditioning, which occur only a few months per year.

  • Power failures happen every year, especially in summer due to the aforementioned air conditioning load. It’s a good bet that several fear-sellers have press releases ready to go for this summer.

  • The utilities are making money on this. More power use means more income.

  • If people use too much power, the providers will raise their prices. Econ 101.

And the Big One

Cryptocurrencies don’t finance war.

The public hasn’t actually paid for a war since WW2. Since then the whole game’s been run on credit. (The same goes, more or less, for everything Big Guv does to save us poor, helpless sheep.)

With Bitcoin and all the cryptos that I know of, you can’t do such things. If you want to throw a war in a crypto-based economy, you’ll have to convince people to pay for it. Good luck.

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Paul Rosenberg
www.freemansperspective.com

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  • Ron Danielowski

    “… It’s a good bet that several fear-sellers have press releases ready to go for this summer.”

    Bank on it.

  • Greg

    Very interesting, Paul. It would be great if you’d write more about environmentalism.

    You might like the book The Rational Optimist.

    I’ve fallen for a lot of the fear campaigns over the years. And, I’ve seen how angrily and irrationally the people who believe in them react when you cast even a little doubt.

    So I’m not exactly one of them. However, I can’t shake the conclusion of doom when I look at various trends – fishery collapses, topsoil depletion, rainforest razing, and tonnes of people way smarter than me saying climate change is a big deal.

    Maybe it’s something about my personality, and not so much the reality/facts. I don’t know.

    Also, I think you’re misrepresenting the environmental argument against Bitcoin, It’s not mine, so I’m not representing, but I think it’s electricity comes mostly from coal. Burning coal puts mercury into the environment (which ends up in fish) and CO2 into the air. Therefore, a power-hungry technology contributes to these bad things.

    Interestingly, a lot of the predicted growth in power consumption didn’t happen here in Australia. After A/C, most of the home amenities people have added have been low power stuff like electronics.

    • Paul Rosenberg

      Sorry Greg, I have time only fpr this today: “I think it’s electricity comes mostly from coal.”

      Very little electricity comes from coal these days. It’s mainly gas (much, much cleaner than coal) and nuclear (no hydrocarbons at all.) It’s possible that Australia’s an exception, but I dunno.

      • Greg
        • Paul Rosenberg

          No, according to your chart, coal use is 14% in the US, not 38%: https://flowcharts.llnl.gov
          I don’t know of a single coal plant still in service; they’ve all converted to gas. But, perhaps the chart makers know things I do not.

          In any event, it doesn’t matter: If you’re serious about this you need to go after the air conditioning industry. Mining is small potatoes.

          • Greg

            Yes, coal is 14% of total energy used but 38% of electricity production’s fuel (from the LLNL chart). My point is that’s not “very little” (though before researching this I thought it would be a lot higher so gratitude to you).

            Global annual energy use for a/c: 300 TWh (but, that figure is from 20 years ago and for residences only).

            Global annual energy use for Bitcoin: 70 TWh (but, Bitcoin covers just a tiny fraction of financial transactions currently).

            If Bitcoin were to replace just 100,000 Visa transactions, we’d be looking at 35 million TWh annually. Wow! Total world electricity production is only 20,000 TWh.

            I’m just interested in finding truth and don’t really have a position, but I think these facts are compelling enough to inform position. At the very least, Bitcoin’s energy consumption puts a cap on its scalability that’s not too far from where it’s at now. Maybe Lightning (or a proof-of-stake crypto) will change all of that.

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